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International relations

Coronavirus exposes ASEAN divisions on rice security

Officials fail to reach immediate agreement at emergency summit

A curfew in Thailand is driving consumers to hoard rice for fear of a prolonged stay-at-home order. (Photo by Ken Kobayashi)

BANGKOK/MANILA -- The rapid spread of new coronavirus cases in Southeast Asia has exposed the region's divisions on food security, particularly as rice-growing nations move to lock up supplies of the staple.

In Thailand, the world's second-biggest rice exporter, a curfew imposed on April 3 is driving consumers to hoard rice for fear of a prolonged stay-at-home order. Meanwhile, Vietnam, the third-largest exporter, imposed a rice export ban on March 24, with Cambodia following suit.

Such actions by major rice growers have raised concerns in importer nations and prompted senior officials from the Association of Southeast Asian Nations members to hold an urgent meeting earlier this month to seek ways of securing food supplies in the 10-nation regional bloc.

"We basically agreed that ASEAN nations should keep their trade open to allow all members access to goods, particularly food," Oramon Sapthaweetham, director-general of Thailand's Department of Trade Negotiations, told the Nikkei Asian Review.

"However, each country should have their own right to take any action to secure their food security as Vietnam did. That's why we need more time to reach an agreement," she added.

With its export ban, Vietnam took extra steps to secure rice for domestic consumption. Despite the requests from exporters and domestic industry to remove or ease the restrictions, Vietnam's Ministry of Finance suggested on April 10 extending the embargo on low-grade rice until June 15 to ensure purchases for the national reserve, which is set to reach 190,000 tons. It came after Hanoi's move to set a quota of 400,000 tons of rice for export. 

Cambodia had followed Vietnam's step for the same reason, creating anxiety among rice-importing ASEAN countries -- particularly the Philippines. The region's biggest rice importer bought 2.9 million tons last year and is forecast to import around 2.5 million this year, largely from Vietnam.

"At least 200,000 to 500,000 tons of rice are now being held up at ports in Vietnam and Cambodia, and these delayed shipments have caused supply tightness in some counties," said a Singapore-based trader.

Rice is not only a major staple in ASEAN countries, but also a politically and emotionally charged commodity, particularly for importers such as the Philippines and Indonesia, where governments face pressure to satisfy domestic consumption and keep inflation low.

Philippine Agriculture Secretary William Dar wrote his Vietnamese counterpart in late March asking assurances on continued deliveries of rice to Manila, which is Vietnam's traditional rice buyer.

In contrast, major rice exporting countries, such as Thailand and Vietnam, need to keep domestic rice prices high to maintain the support of poor farmers.

The coronavirus pandemic is exacerbating these long-standing tensions. Among ASEAN nations, the Philippines was the hardest-hit, with 4,932 coronavirus-confirmed cases and 315 deaths as of Tuesday. Malaysia followed with 4,817 confirmed cases and 77 people dead, while Indonesia had 4,839 confirmed cases and 459 deaths.

Not only the Philippines, but other ASEAN countries also felt the heat and tried to secure rice and food supply amid the outbreak.

This year, severe drought in Thailand and Vietnam, as well as strong purchase from Asian buyers, have pushed global rice prices to a 7-year-high. As a result, Thai exporters are reluctant to commit to deals with the Philippines when it approached Thailand for rice after Vietnam imposed its export ban.

Although Vietnam's deputy minister for agriculture and rural development, Le Quoc Doanh, said Hanoi will honor its export commitments to the Philippines, it is unlikely that Vietnam can delivery rice to Manila immediately as orders from China skyrocket.

China's rice import from Vietnam increased 595% to 66,000 tons during the first two months of 2020. Besides, there was also an increased importing trend from other markets, such as Iraq, Malaysia, France, Taiwan, Senegal, and Russia.

That has forced Manila to seek rice from Myanmar, but that country's government also suspend rice export licenses, making it hard for the Philippines to secure immediate supplies of the staple. As of the end of March, the Philippines has a total rice inventory good for 75 days, and by the end of June, inventory is projected at 67 days.

For Indonesia, although the government said it has 3.5 million tons of rice stockpiled, it said last month it was still open to possibilities of import if the coronavirus situation drives rice prices up -- as it has done with garlic and sugar prices -- to curb inflation.

Indonesia imported 600,000 tons of rice last year and is forecast to import around 1 million tons this year, according to the U.S. Department of Agriculture.

The world's biggest rice exporter, India, also faces trading hurdles as the country imposed a sweeping lockdown that has completely disrupted exports. The country exported 9.8 million tons last year.

"Rice-importing countries are struggling to get rice at this moment and it would get worse if the outbreak lasts longer than a few months from now on. That could mean longer rice export bans in some exporting countries," said a Bangkok-based trader.

Philippine President Rodrigo Duterte voiced his concerns during an ASEAN video summit held on Tuesday.

"We are particularly concerned with food security in this period of lockdowns," Duterte said. "Our most urgent priority is ensuring sufficient supply of rice for our people."

The Philippine leader stressed that the bloc must remain "open for trade, crisis or no crisis, as no country can stand alone."

"Let us, therefore ensure the supply chain connectivity and the smooth flow of goods within our region."

Additional reporting by Erwida Maulia in Jakarta.

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